A Nebraska town, angry over a surge in the number of Hispanic residents, is voting today in a referendum on a new law that would require foreign nationals to get a licence to live in the town.

The referendum in Fremont has been prompted by a sharp rise in Hispanic people drawn by work at meatpacking plants, combined with fears over job losses and demand placed on the town's social services because of the economic downturn. If approved, tenants who are not US-citizens would be required to get an "occupancy licence" from the city council. Even residents of nursing homes would be required to obtain such a licence.

Federal law requires employers to verify the immigration status of workers, but the proposed law would also open violators to local sanctions. Supporters insist it is not racist and is essential to protect jobs, healthcare and education because the town's Hispanic population has grown from 165 to more than 2,000 in 20 years.

It is unclear what proportion of those are in the US illegally, but the big meatpacking plants where many work say they only employ people whose immigrant status has been verified.

The Fremont Tribune has reported cases of Hispanic people who are legal residents being verbally abused and told to return to Mexico.

Jerry Hart, one of the three sponsors of the legislation, told the Fremont Tribune that the proposed law was in part a security measure. "The federal law was put into place for a reason – to control how many people come into this country and to regulate the people, so they don't have communicable diseases and are not bringing in drugs or having criminal records and these people who are sneaking in – you don't know what you're getting. We could have terrorists and gang members and people involved in drugs," he said.

John Wiegert, another of the sponsors of the referendum, said: "A lot of them are coming here for the American dream and they're causing nothing but an American nightmare to me."

Nebraska Governor Dave Heineman has declined to take a position even though he is a former Fremont city councillor and owns and rents out property in the city.

Some business owners oppose the measure, claiming Hispanic residents bring money to the town, and are concerned at the cost to taxpayers of legal challenges by civil liberties groups.

The American Civil Liberties Union is suing the state of Nevada over a proposed referendum to introduce tough immigration laws – similar to the controversial measures in force in Arizona – which require police to detain anyone they reasonably suspect to be in the US illegally.

The proposed Nevada law would require non-US citizens to carry proof they have the right to be in the US and make it illegal to transport or house undocumented immigrants, among other measures.

The ACLU and the Nevada Open for Business Coalition, a mix of casino owners, shopkeepers, unions and civic groups, on Friday asked a court to block the vote on the grounds it would promote racial profiling and hurt the state's economy."Not only does the intent of the proposal blatantly violate America's most fundamental values of fairness and equality, the expansive scope of it intentionally confuses voters," said the ACLU's lawyer, Maggie McLetchie.

The proposed Nevada law has run in to objections from some in the business community concerned at the economic impact of Arizona's anti-illegal immigrant legislation on the state.

The controversial law has led to boycotts of Arizona by some organisations, costing the state part of its lucrative convention business as well as affecting tourism. Towns near the Mexican border also report a sharp drop in the number of customers from Mexico.